Weikang Zhang’s research while affiliated with Shanghai University of Finance and Economics and other places

We study China’s import demand elasticities using HS 8-digit customs data on China’s provincial imports during January 2019 to March 2021. It is found that both direct bilateral exchange rate elasticity and third-country exchange rate elasticity are affected by (1) policies that these Asian economies adopted to alleviate the adverse impacts of the COVID-19 pandemic and (2) the degree of concentration of exporters exporting a certain product to a certain Chinese provincial market. It is found that economic support policies will lower the bilateral exchange rate elasticity of trade flows, or even alter the sign of the bilateral exchange rate elasticity of China’s imports. Besides, the economic support policies can alleviate the pressure of foreign competition on exporters and make the exporters more resilient to the impacts of foreign competitors’ exchange rate depreciation. In contrast, the degree of market concentration of exporters in a certain provincial market affects the exchange rate and the third-country exchange rate elasticity differently. A higher market concentration lowers the bilateral exchange rate elasticity of trade flows but magnifies the impact of foreign competitors’ currency depreciation on exporters. These results are robust to alternative modes of trade, regional heterogeneity, product heterogeneity, various measures of policy responses to the pandemic, and alternative database.

In this paper, we employ the input–output framework and recent global value chain (GVC) results to construct the index of foreign financial services adoption in manufacturing (FFSAM) that captures the role of foreign financial services in facilitating domestic manufacturing production. The FFSAM index shows that foreign financial services adoption by Asian economies has rapidly caught up with the Western world between 2007 and 2017. Asian economies tend to deploy more foreign financial services from high-income economies than low-income economies, and in high-technology manufacturing industries than low-technology manufacturing industries. Manufacturing industries that produce for domestic consumption and for exports tend to attract different groups of financial servicification providers. It is found that the FFSAM index is affected by the GVC position, financial institution factors, and financial market characteristics.